Bit by bit, Britain's crown jewels are being snapped up. Every week, a bland announcement confirms the sale of another major British institution to a foreign predator and, bizarrely, no one is complaining. On the contrary, the booming sale of Britain's key industries has been hailed by Gordon Brown and Ed Balls as proof that enterprise is flourishing under Labour. Obsessed by globalisation, a dangerously misunderstood fad, Brown believes that selling off every British asset is a brilliant coup. Labour's somersault is bewildering. The opposition is mute.

Over the last few days, Corus, Britain's steel industry, was sold to a small Indian company, and then Liverpool football club became an American subsidiary. Before the paperwork was completed, American equity investors admitted their interest in Sainsbury's, the epitome of Britain's high street. Still unresolved is the ferocious battle waged by Nasdaq to buy the bigger London stock exchange. Over £18bn is in play and the stampede is gathering pace. Within the next few months, speculators are betting on bids for the remaining share of Britain's prize aerospace industry - Rolls-Royce and British Airways - and then Cable & Wireless, ICI and William Morrison are likely targets. At this rate, by June, the vulnerable could include BP, HSBC and Barclays.

In previous eras, takeover bids provoked furious battles and bitter recrimination. In macho style, tycoons and their professional advisers staked their reputations and spilled blood to resist disinheritance. Yet, bewilderingly, the current grab for the remaining pillars of Britain's wealth is positively gentlemanly. Shareholders and managers quietly acquiesce to a foreign bid, pocket their redundancy package and depart without a murmur. No one questions the damage to British society, the inevitable decline of taxes paid to the Inland Revenue and the subjugation of the British economy to foreign interests. Nowadays, there is no premium in standing up for Britain. Since the major banks and industries are foreign owned, the familiar chorus which previously questioned the consequences of selling off the means of production has evaporated. Over the past decade, the peer group formerly called the British establishment has ceased to exist.

Last year foreign corporations spent £75.5bn on British enterprises. Remarkably, most of that money was borrowed. Gigantic loans recently financed the purchase by Spanish corporations of the British Airports Authority, O2 and Abbey National. Two water companies were procured by foreign investors. Pilkington Glass, a world leader, was bought by a small Japanese competitor. Smiths Electronics, a cornerstone of Britain's technology, slipped silently into the clutches of General Electric, the American giant. Not only have the British wilfully allowed themselves to become colonial servants, but that process has been positively encouraged by Gordon Brown as proof that Britain has always profited from open borders and the free movement of capital. The chancellor's skewed understanding of capitalism has damaging consequences.

The fate of Thames Water under German ownership provides a simple lesson about the perils of foreign ownership. After the company was purchased in 2000 for £4.3bn, the Germans raised £1.4bn in loans against the assets and deposited the money in Germany. That debt has to be repaid by Thames's customers in London. Simultaneously, the Germans resisted investing sufficient money to ensure London was protected from droughts. Last year the managers paid themselves about £10m in bonuses, again raised the tariffs for consumers and sold the company to an Australian company for £8bn. Everyone lost except the Germans, who walked away with £500m, plus all the dividends and bonuses over the previous years.

Equally pertinent is the fate of British expertise. Until Britain's water companies became foreign owned, British engineers ranked among the world's best in water treatment. The new lucrative market for improving water supplies is now in China. The Chinese are awarding huge contracts to Europe's big water suppliers, but that no longer includes the British. At the headquarters of the French and German companies who own Britain's water suppliers, they naturally send their own nationals across to China and the profits are deposited in France and Germany. Overnight, Britain has not only lost income from the sale of expertise and new equipment, but also engineering jobs for university graduates. That experience is common across most foreign-owned British companies. One consequence is the loss of British leaders, educated men and women whose contribution was a cornerstone of a healthy society. The link between the loss of that peer group and Britain's appalling social statistics in crime, illiteracy and divorce cannot be ignored.

The compounded effect of all these foreign takeovers cannot improve British society. Corporate chiefs in Tokyo, Paris and Madrid care little for the fate of British schools, civic institutions and probity in public life. Britain, as a colonial outpost, is only relevant for crude profits, not long-term social developments. Pertinently, colonial economies do not produce outstanding, independent leaders. Bereft of the best and the brightest, Britain's national debate about education, the economy and even culture will become threadbare.

Britain's economic fate is best reflected by developments in English football. Indisputably, the Premiership is the world's best club competition, but the sale of Liverpool and six other clubs portends disaster for the national game. Premiership clubs are already dominated by foreign players and the new owners have shown no interest in nurturing English talent. Indeed, West Ham's famous youth academy - now under Icelandic ownership - is at risk of being downgraded. Hungry for big bucks to repay their investment, foreign owners will continue to buy players from across the world. Why should they care about England's fate? The harm caused by that self-interest was England's defeat by Spain on Wednesday and the prospect of failing to qualify for the 2008 European Champonship.

Not even the English Football Association seems concerned. Asked recently about the effect of the foreign purchase of England's best clubs, Brian Barwick, the FA's chief executive, replied: "We'll only know in 10 years." Barwick, like Gordon Brown, is a bureaucrat speaking into a void. Britain lacks the leadership based upon principles and arguments to summon resistance.

Surprisingly, Britain's best champion is Clara Furse, the Dutch-born chief executive of the London Stock Exchange (LSE). Despite the snide carping from Brown and Balls, Furse has singlehandedly seen off predators whose single interest is to buy the LSE in order to remove a powerful competitor. Having defeated the Germans, Australians and Americans, the resilient woman has exposed the absence of mettle among the natives. Before it is too late, someone should ask why Britons, uniquely in the world, want to be controlled by foreign corporations and why no Brit wants to buy an English football club. In the meantime, Gordon Brown should examine why his bid to champion enterprise has actually sucked ambition from Britain's lifeblood.

· Tom Bower is the author of Broken Dreams: Vanity, Greed and the Souring of British Football.